SINGAPORE — Firing its latest salvo at competitors, mobile virtual network operator (MVNO) Circles.Life on Thursday (Sept 5) launched a S$5 plan for low data users. The plan offers users 2GB of data, 50 minutes of talktime and 25 SMSes a month.

Circles.Life said that the S$5 plan aims “to serve the 20 per cent of users who consume 2GB of data a month” — those requiring only a basic plan to communicate with friends and family.

Users of the plan who want more data can opt for “boost options”, starting with 1GB for S$8, 2GB for S$12, 30 minutes talktime for S$5 or 200 minutes of talktime and free incoming calls for S$10, the firm said.

Head of Marketing for Circles.Life Delbert Ty said: “During the past three years, we have changed the average data use from 4GB to 12GB a month through our base plan. While this serves people who need a lot of data, there are those who are looking for a great experience but don’t need that much data.”

LEANER COST STRUCTURES

Telcos have been knee-deep in a price war since MVNOs stormed into the market about three years ago.

MVNOs’ leaner cost structures and digital retail model have allowed them to roll out lower-priced plans to gain market share from the bigger players. The larger telcos then responded by offering similar plans of their own.

The traditional telcos earlier this year began offering a variety of plans to suit changing consumer needs, rolling out unlimited-data, SIM-only and no-contract plans.

Singtel and StarHub launched their own SIM-only plans Gomo and Giga in March and May respectively. The Gomo plan offers users 20GB for a S$20 SIM-only plan, while Giga promises users 25GB of data for a S$25 SIM-only plan.

In a similar move, M1 then consolidated its 19 mobile plans in May with SIM-only, no-contract plans from S$25 for 30GB of data.

While the S$5 plan by Circles.Life seems like a cut below the current plans on the market, analysts were not surprised at the move, with some warning that it might not be sustainable in the long run.

'NOT SURPRISING'

DBS head of telecom, media and technology research Sachin Mittal said Circles.Life’s new plan was not a surprising move. “Circles.Life has been playing this game for a long time, data pricing is going on a downward spiral and it’s going to continue,” he said.

“Average data pricing in Singapore so far is around S$4 per GB, which is expected to decline going forward along with average data consumption rising compared with 5GB per user now.”

Mr Mittal said that the new Circles.Life plan seems to target “a niche segment” as average data consumption per user is expected to rise.

He added that the new S$5 plan “cannot be considered a new low” as Circles.Life had previously offered a “free” no-contract plan which offered users 1GB of data.

Circles.Life said that this “Flexi Plan”, at S$0, offers users 1GB of data, 30 minutes talktime and 10 SMSes, and users will need to show usage to keep their plan.

Mr Alvin Chia, a research analyst at Phillip Securities Research, said that Circles.Life’s announcement looks to be an “attempt to protect and maintain its customer base with the impending entry of TPG”.

Australian telco TPG started its free 12-month service trial in Singapore last December and is expected to launch commercial services later this year.

“Circles.Life is offering nothing new besides lowering their base price. With the add-ons their prices will be relative to other operators,” said Mr Chia.

“Pricing has always been a tool for MVNOs but sustainability is a question. This new offering sacrifices margins with an attempt to retain market share, and consumers really are spoiled for choice.”

Mr Ian Fogg, vice-president of analysis at mobile analytics firm Opensignal, said: “If operators race to lower prices, in effect a race to the bottom, the risk is the mobile industry lacks sufficient revenue to justify investments in network improvements to keep pace with rising smartphone data traffic or to launch new technologies like 5G.”

He warned that if operators do not focus on providing quality mobile network experiences to consumers and get caught up in a price war, users’ network experiences could suffer in the near future.

“Mobile operators that offer their users a better mobile network experience need to communicate this clearly to explain why their prices are higher,” he said.

“If operators can explain these benefits, and consumers are prepared to pay a little more as a result, then Singaporeans will continue to enjoy one of the world’s best mobile network experiences.

“If not, and prices fall across all operators, the mobile network experience in Singapore will suffer over the next year or two.”